Correlation Between Universal Display and FormFactor
Can any of the company-specific risk be diversified away by investing in both Universal Display and FormFactor at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Universal Display and FormFactor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Display and FormFactor, you can compare the effects of market volatilities on Universal Display and FormFactor and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Universal Display with a short position of FormFactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and FormFactor.
Diversification Opportunities for Universal Display and FormFactor
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Universal and FormFactor is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and FormFactor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FormFactor and Universal Display is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Universal Display are associated (or correlated) with FormFactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FormFactor has no effect on the direction of Universal Display i.e., Universal Display and FormFactor go up and down completely randomly.
Pair Corralation between Universal Display and FormFactor
Given the investment horizon of 90 days Universal Display is expected to generate 0.84 times more return on investment than FormFactor. However, Universal Display is 1.19 times less risky than FormFactor. It trades about -0.01 of its potential returns per unit of risk. FormFactor is currently generating about -0.03 per unit of risk. If you would invest 18,232 in Universal Display on September 5, 2024 and sell it today you would lose (1,796) from holding Universal Display or give up 9.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Display vs. FormFactor
Performance |
| Timeline |
| Universal Display |
| FormFactor |
Universal Display and FormFactor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and FormFactor
The main advantage of trading using opposite Universal Display and FormFactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, FormFactor can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in FormFactor will offset losses from the drop in FormFactor's long position.| Universal Display vs. Plexus Corp | Universal Display vs. Methode Electronics | Universal Display vs. Benchmark Electronics | Universal Display vs. Bel Fuse A |
| FormFactor vs. Silicon Laboratories | FormFactor vs. Diodes Incorporated | FormFactor vs. MACOM Technology Solutions | FormFactor vs. Amkor Technology |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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